The fabless semiconductor company
Mellanox Technologies Ltd.
(
MLNX
) is set to release its fiscal third quarter 2012 results after the
closing bell on October 17, 2012. Mellanox has posted an average
earnings surprise of 54.29% over the past four quarters. We don't
expect a major change in the earnings trend pattern for the current
quarter.
Prior Quarter Recap
Mellanox reported robust second quarter results where the top
line soared 110.7% on a year-over-year basis to $133.5 million and
comfortably surpassed the Zacks Consensus Estimate of $120.0
million. The strong revenue growth was primarily driven by higher
demand for FDR (Fourteen Data Rate) InfiniBand products.
Buoyed by strong revenues and better-than-expected margin
expansions, Mellanox's bottom line of 79 cents comfortably beat the
Zacks Consensus Estimate of 55 cents.
For third quarter 2012, Mellanox's total revenue is projected in
the range of $150.0 million to $155.0 million and gross margins in
the range of 70% to 71%. Operating expenses are expected to
increase 6.0% to 8.0% on a sequential basis. The Zacks Consensus
Revenue Estimate for the third quarter is $153.0 million.
Estimate Revision Trend
In the last 30 days, none of the four analysts covering the
stock revised their estimates for the third quarter. Thus, the
Zacks Consensus Estimate for the quarter remained at 92 cents per
share.
Analysts expect Mellanox to report strong quarterly results
driven by strong momentum of the core interconnect business.
Moreover, strong demand for its InfiniBand products is the other
positive catalyst for the company.
Recommendation
We believe that Mellanox will continue to outperform its peers
based on strong demand for InfiniBand products particularly from
the high performance computing, cloud data centers and web 2.0
markets. Moreover, the company's expansions in the cloud and
enterprise storage segments are the other positives. The release of
Microsoft Corp.
's (
MSFT
) Windows Server 2012 operating system is also expected to drive
results in the near term.
We have an Outperform recommendation on Mellanox over the long
term. Currently, Mellanox has a Zacks #1 Rank, which translates
into a 'Strong Buy' rating in the short term.
MELLANOX TECH (MLNX): Free Stock Analysis
Report
MICROSOFT CORP (MSFT): Free Stock Analysis
Report
To read this article on Zacks.com click here.
Zacks Investment
Research